Category: Revenue and taxes

A Superior Court judge last week lopped a limb off Proposition 98. Fans of Monty Python might have been amused; school districts will not be.

The three-paragraph rulingby San Francisco Superior Court Judge Harold Kahn simply reaffirmed a tentative ruling he issued in March. Back then he ruled that nothing prevents the governor and Legislature from shifting money out of the General Fund, even if that in turn leads to less funding for K-12 schools and community colleges under Proposition 98, the law setting minimum funding for schools.

The loss is significant. As part of the 2011-12 state budget, Gov. Jerry Brown transferred about $5 billion in sales tax and vehicle license fee revenues to a special fund as part of his shifting of state safety and social services to counties and cities. Had the money stayed in the General Fund, roughly 40 percent, or $2.1 billion, would have gone to the Proposition 98 guarantee.

The California School Boards Association, the Association of California School Administrators, and three school districts sued, claiming that was an illegal diversion of money owed schools. Their attorneys argued that voters passed Proposition 98 in 1988 to prevent manipulation of minimum dollars owed schools. Legislators could suspend the minimum obligation with a two-thirds vote, while acknowledging that the money owed had to be restored over time. They didn’t do this. Or, if they still wanted to set up a special fund outside of the General Fund, they could pay a higher percentage to schools of a diminished General Fund. Lawmakers didn’t do this either.

Kahn didn’t put enough in writing to fathom his thinking, but during oral arguments in March he implied that if drafters of Prop 98 had wanted to prevent the siphoning of money through special funds, they would have put it into the initiative. Lawyers for the plaintiffs argued that the intent of voters was clear: a minimum funding level that shouldn’t be tampered with.

ACSA and the CSBA haven’t decided whether to appeal Kahn’s ruling. Superior Court decisions are not cited by other courts as precedent-setting decisions, so there’s always a gamble going to the Court of Appeals. Meanwhile, Brown plans further tampering with Prop 98 if his tax initiative fails in November. He is proposing to stuff $2.6 billion in school construction bond payments, which had been funded as part of the non-Prop-98 part of the General Fund, into Prop 98. In effect, that would create a cut in funding for schools.

Though the circumstances are different, Kahn’s ruling will encourage these types of manipulations.

Voters remain up in the air about passing a statewide tax to help schools, according to recent polls. But given a chance to support local schools exclusively, more than two-thirds of voters in nine school districts said yes – a wide enough margin to pass a parcel tax. Even the four parcel taxes that lost got over 60 percent support and would have passed had the threshold for passage been 55 percent – an idea that’s been kicking around for years but can’t get out of the Legislature for lack of Republican votes. *

Also in Tuesday’s primary, voters in 23 K-12 districts passed nearly $2 billion worth of school construction bonds, a strong commitment in uncertain times. A piece of that money in some districts will go toward upgrading technology, critical as districts move toward implementing Common Core standards with digital textbooks and computer-administered assessments. Bond measures in an additional 11 districts were rejected, although a few came tantalizingly close to the 55 percent needed for approving school bonds.

For 2012, 13 of 18 parcel taxes have passed; that’s 72 percent, which is higher than the historical passage rate of 58 percent. Among the losers on Tuesday were a $54, four-year parcel tax in Santa Barbara, which would have replaced a $50 tax due to expire next year, and a parcel tax in West Contra Costa Unified based on a home’s size – 10.2 cents per square foot. But voters there can get another chance, if the school board is inclined, since the existing 7.2 cents per square foot won’t expire for two years.

Parcel taxes are one of the few ways that school districts can raise money. They’re predominately found in high-cost Northern California, especially the half-dozen counties in the Bay Area, with a smattering in wealthy districts around Los Angeles. Most parcel taxes are under $100, especially initial parcel taxes. Theexceptionson Tuesday were an eight-year, $458 tax in Ross Valley School District in Marin County, replacing a $309 parcel tax, and a $123, eight-year tax for elementary and high schools in Santa Cruz; it passed with more than 80 percent of the vote.

Because of the passage of Proposition 13, parcel taxes cannot be based on a property’s value. Because McMansions, cottages, and office buildings are all charged the same, parcel taxes are regressive, unrelated to an ability to pay. So it’s ironic that both tax initiatives on the November ballot, which would raise money by raising the graduated income tax (Gov. Jerry Brown’s would also include a ¼ cent increase in the sales tax) are doing far worse than the parcel taxes and bond measures. Attorney Molly Munger’s Our Children, Our Future tax would send money directly to schools – essentially what parcel taxes do – though that feature is not widely known.

Voters favor local control with their money, which appears to be why parcel taxes, for all their faults and limited geographical range, continue to do well.

* Thanks to Mike McMahon, school consultant and trustee of the Alameda Unified School District, who tracks historic and current information on parcel taxes and other school data.

Four Republican legislators crossed party lines in the Assembly on Wednesday, providing the two-thirds vote needed to approve a bill that would create a middle class scholarship program for the state’s public college and university students.

AB 1501 is part of a two-bill package called the Middle Class Scholarship Act introduced by Assembly speaker John A. Pérez, a Los Angeles Democrat, that would reduce tuition by two-thirds for students attending the University of California and California State University whose families earn less than $150,000 a year.

In urging a yes vote, Pérez cited the enormous fee hikes at the state’s public colleges and universities, noting that in the past decade tuition has increased by 191 percent at Cal State, by 145 percent at the University of California, and by 300 percent at community colleges. Meanwhile, state support for UC and CSU has dropped by 21 percent and 26 percent respectively since 2005.

Ten-year history of changes in CSU tuition. (Source: California State University.) Click to enlarge.

“This means that for thousands of California families, higher education entails increasingly difficult tradeoffs,” said Pérez; tradeoffs that would either compel parents to make huge sacrifices, or force students to take on massive loan debt. “For many Californians those tradeoffs are too great, and they make the reluctant decision to forego a higher education altogether.”

Student loan debt now exceeds $1 trillion nationally, more than all U.S. credit card debt. Statewide, according to the California Student Aid Commission, there’s been a double-digit increase every year for the past three years in the number of students who qualify for loans and for the state’s Cal Grant awards.

Under AB 1501, eligible Cal State students would save $4,000 per year, or $16,000 over four years, while UC students would save about $8,200 per year, or nearly $33,000 over a four-year period. Students from families earning between $150,000 and $160,000 a year would be entitled to assistance at a lower level; their scholarships would be reduced by 10 percent for each $1,000 in family income over $150,000. California community colleges would receive $150 million to help students defray the cost of textbooks and offset other educational expenses.

Lack of investment “criminal”

Modesto Assemblymember Kristin Olsen, vice chair of the Higher Education Committee and one of the Republicans who broke ranks and supported the measure, defended her position during the floor debate as a vote for the state’s economic prosperity.

“We have slashed state investment in higher education, and that’s criminal,” Olsen said. “One of the only ways we’re going to grow a strong economy over the long term is by investing in our public universities to make sure that we are graduating educated employees who are prepared to compete in a global workforce.”

She noted that wealthy families can afford to pay tuition, and low-income families have various options for state and federal aid, but middle-income families are being hit hard by escalating tuition and the faltering economy.

But her colleague in the GOP caucus, Assemblymember Tim Donnelly from Twin Peaks, wasn’t moved, except to sarcasm. “I see these programs and they sound so nice – middle class scholarship fund – woo-hoo, hallelujah, Praise the Lord! I love it, sounds wonderful, why don’t we give one to everybody?” he quipped. “Oh yeah, there’s a slight little problem: we don’t have the money.”

Donnelly blamed union wage demands and injudicious spending decisions by UC and CSU for their financial problems, especially giving huge pay raises to new campus presidents while increasing student fees. Then he offered this sage advice: “I remember when I went to school. I went to the University of California at Irvine; I got three jobs to pay my way through. My idea of a middle class scholarship is a job.”

Half a loaf

While there is some disagreement among Republicans on AB 1501, they are united in their opposition to its companion bill, AB 1500. This is the half that pays for the Middle Class Scholarship Act.

Pérez wants to fund it by closing a loophole in the 2009 Corporation Tax Law that gave companies operating in both California and another state the option of computing their taxes using either the Single Sales Factor (SSF), which is based on their California sales, or another formula that gives the companies more flexibility on how much taxes they’ll pay. The policy was adopted in one of those never-well-thought-through budget deals reached in the middle of the night.

Requiring those companies to move to the SSF would increase the state’s general fund by about $1 billion in 2013-14, according to the Legislative Analyst’s Office. In fact, the LAO recommended that the state take that action two years ago.

Gov. Brown tried to change the law last year, by getting bipartisan support for AB 40X. The bill would have mandated the SSF and returned the revenue to businesses in the form of job credits as an incentive for hiring Californians. Although it passed the Assembly, the bill did not garner any GOP support in the Senate and died.

One of the sponsors of AB 40X was Assembly Republican Cameron Smyth of Santa Clarita. He’s also one of the four Republicans who voted yesterday for AB 1501. But in a phone call Wednesday afternoon, Smyth said he will not be supporting AB 1500.

“It would be another funding obligation from the state,” said Smyth. “I still think the Single Sales Factor needs to be reexamined, but I do have concerns, because unlike last year, this bill is a tax increase and it creates a new entitlement.”

Kristin Olsen and the other two Republicans who voted for AB 1501 – Katcho Achadjian from San Luis Obispo and Jeff Gorell of Camarillo – have also said they will not support the companion bill, but are willing to work with Speaker Pérez on finding a different funding source, such as savings from the governor’s pension reform proposal.

Assemblymember Olsen said adequate funding for public higher education ought to be a top priority in the general fund if California is committed to maintaining a premier public university system. But she’s not optimistic. “The direction that California is headed today, quite honestly, makes me fearful,” said Olsen, “and makes me question whether I will be able to send my three kids to college.”

The state Department of Finance has released the district allocations under Gov. Jerry Brown’s revised plan for weighted student funding that shaves off the peaks, fills in the valleys, and includes other changes that make allotments flatter, arguably fairer, and potentially more politically palatable to those who criticized aspects of the formula.

The 77-page spreadsheet of district and charter school allocationsdoesn’t reveal – and inquiring minds will want to know – how districts compare with one another and with a statewide average once the formula is fully funded in 2018-19. But the raw numbers are there to calculate percentage increases and per-student spending, and Nick Schweizer, the program budget manager for education in the Department of Finance, did provide me with a district average increase, along with some cautions.

That figure is 47 percent, which is to say that between the base year of 2012-13 and full funding seven years later, the Department of Finance is projecting the average district’s growth under the formula, which covers most but not all education spending, will be 47 percent. This assumes that the tax increase proposed for November passes; the weighted student formula will be put off if it doesn’t. So, if your district revenues increase more than 47 percent, because you have large numbers of disadvantaged students, it’s more than likely a “winner” under the formula; if under 47 percent, it’s more than likely a “loser.” (Update: The Public Policy Institute of California on Tuesday released an analysis of the revised formula, with district figures. Go here.)

The impact of the proposed weighted student funding formula on the state's 10 largest districts. To determine a district's increases in per-student funding from 2012-13 to full funding in 2018-19, divide columns 5 and 7 by student enrollment in column 4. Source: State Department of Finance. (Click to enlarge)

The chart at left, which shows the 10 largest districts, illustrates the impact. Santa Ana Unified, with 84 percent poor children and 56 percent English learners, will see district funding rise 71 percent (last column divided by fifth column) by 2018-19, and per-student funding rise from $6,460 to $11,040. Capistrano Unified, with 10 percent English learners and 21 percent low-income students, will see district funding rise 38 percent and per-student funding increase from $6,052 to $8,388.

There are caveats to consider when comparing a district with the 47 percent statewide average:

& As Schweizer points out, this assumes that, absent the formula, nothing will have changed in the allocation of categorical or restricted money and general or revenue limit spending in seven years. That would be unlikely, given that the trend has been to cut or eliminate some categorical programs and increase the revenue limit;

& Some districts might get less than 47 percent and still do better than they would have otherwise, if they are currently getting little categorical money. Each district’s individual circumstances vary somewhat;

& A district’s base in 2012-13 matters. Some districts, like Los Angeles Unified, will see per-student spending increase less than 47 percent. But they will start with a high base in 2012-13 and will end up doing well in 2018-19 (more on why later).

As for the 47 percent spending increase over seven years: Finance released a graph showing per-student funding, but only through 2015-16 (see chart), as far into the future as it makes detailed projections. Schweizer said that for the remaining three years, Finance conservatively projected 5 percent annual revenue increases. It also assumed flat district enrollments for the calculations. The four-year, ¼ percent sales tax increase that is built into the calculations ends in 2015-16, complicating the picture.

Significant changes from January’s formula

Under a weighted student formula, districts will receive a base funding per student plus a supplement based on the number of low-income students and English learners. Brown proposed to fund the supplement, or weighted portion, from a pot of what has been categorical programs. Districts with few disadvantaged students will lose most if not all of that money, amounting to hundreds of dollars per child.

Responding to criticisms of his initial proposal in January, the governor:

& Raised the base and added grade differentials, recognizing that high school districts have been getting higher funding and elementary schools have received subsidies for smaller classes. The base will be $5,466 per student for K-3, $4,934 for 4-6, $5,081 for 7-8, and $5,887 for 9-12. The K-3 funding will have the previous class-size reduction categorical money folded in, though districts will be free to use the dollars however they choose.

& Reduced the weighted amount for disadvantaged students from an extra 37 percent per child to 20 percent;

& Cut the bonus amount to districts with high concentrations of disadvantaged students from a maximum of 37 percent to a maximum of 20 percent for districts with 100 percent disadvantaged students. The concentration factor is phased in for districts with more than 50 percent disadvantaged populations. The administration has not offered the research behind the concentration factor. Putting that aside, allocating it on a districtwide basis overlooks the fact that individual schools in districts with low overall rates of disadvantaged students may have heavy concentrations of poor students and English learners.

An example is Mount Diablo Unified in Contra Costa County, with an overall average of 21 percent English learners and 36 percent low income. Mount Diablo High School has 71 percent low-income children and 43 percent English learners, while Ygnacio Valley Elementary has 79 percent low-income and 62 percent English learners. Their students will gain nothing because of the district’s average.)

& Phased in the program over seven years instead of six years, starting next year with 5 percent weighted student funding/95 percent current system.

& Paid off what districts are owed from recent years’ cuts and denied cost-of-living raises on the revenue limit portion, which is student funding minus categorical programs. This debt is called the deficit factor and now totals 22 percent of the revenue limit amount – a huge IOU.

Conditioning the full implementation of the weighted student funding on repayment of revenue limit dollars removes a major criticism of the plan. But that will not satisfy those districts with relatively few disadvantaged students, which will permanently see their categorical dollars shifted to more needy districts.

An example is Acalanes Union High School District in Contra Costa County, with a total of 5 percent English learners and low-income students. Under the January proposal, the district would actually have lost money under full funding. Under the latest plan, per-pupil spending will rise 23 percent, or about half of the state average, by 2018-19, because of the loss of about $609 per student in categorical funds, a little less than 10 percent of total funding. Associate Superintendent Chris Learned says that he’s sympathetic to the need for weighted student funding, but that districts’ funding should be fully restored to the 2007-08 pre-recession level before phasing in the new system.

& Pulled two big categorical programs totaling nearly $2 billion (Correction: $1.3 billion) out of the weighted student distribution formula. These are the Home to School Transportation program and the Targeted Instructional Improvement Grant (TIIG), which is mainly money districts received to settle desegregation suits.Neither TIIG nor bus money has been equitably or rationally distributed among districts. But districts like Los Angeles Unified (where TIIG amounts to about $500 per student) and San Jose Unified (nearly $1,000 per student) would be crippled without the money. Brown is proposing to let districts keep what they’ve gotten for TIIG and transportation but no more. Over time, the impact of the money would diminish by not receiving yearly cost-of-living adjustments.

Under the revised formula, Los Angeles Unified’s per-student funding would increase 44 percent by 2018-19, slightly less than the state average, while San Bernardino’s funding would increase 58.5 percent (see chart), significantly above average. But because of TIIG, Los Angeles would start with a bigger base and end up in 2018-19 with $10,967 per student, about the same as San Bernardino’s $11,027.

More California school districts than ever before are heading toward insolvency. The State Department of Education’s Second Interim Status Report for 2011-12, released yesterday, named 188 districts with serious financial problems; of those, 12 have negative certifications, meaning they won’t be able to meet payroll and other bills for this academic year.

California schools that may not be able to make ends meet. (Source: State Dept. of Education) Click to enlarge.

It’s a steep increase over the first interim report, released last February, which we wrote about here. At that time, there were seven districts on the negative list and 120 in qualified status. With the increases, more than 2.6 million of California’s 6.2 million school children attend schools facing uncertain financial futures.

“This is the kind of record no one wants to set. Across California, parents, teachers, and administrators are increasingly wondering how to keep their schools’ lights on, their bills paid, and their doors open,” said State Superintendent of Public Instruction Tom Torlakson in a written statement. “The deep cuts this budget crisis has forced — and the uncertainties about what lies ahead — are taking an unprecedented and unacceptable toll on our schools.”

Given the years of budget cuts to education, the new numbers didn’t come as a surprise to school finance officials, said Mike Hulsizer, head of governmental affairs for the Kern County Office of Education. But it will get worse if neither of the school tax initiatives passes next November. “There is no question that this understates the risk that districts are facing,” said Hulsizer, because many of the districts counted on funds from Gov. Jerry Brown’s tax increase in planning their 2012-13 budgets.

K-12 schools would receive an extra $2.8 billion if the initiative passes, but Brown is proposing cutting K-12 schools about $5 billion – $441 per student – midyear if it fails. Districts weren’t ordered to budget one way or another. Although some county superintendents wanted schools to budget for the worst-case scenario, others told school districts to plan either way, but make sure they have a Plan B in case of a negative vote at the ballot box. “The county’s position is that a district needs to be able to weather the trigger if it does happen,” said Santa Clara County Office of Education Superintendent Chuck Weis. “If a district is already on the edge, then plan for the worst.”

Joel Montero, CEO of the state’s Fiscal Crisis Management and Assistance Team (FCMAT), told a state Assembly committee two weeks ago that small and rural districts face the largest impact from another round of midyear cuts. “Small and tiny rural districts don’t really have an economy of scale,” said Montero. They don’t have enough money or students to absorb any additional losses, particularly when those losses come in the form of deferrals, the $9 billion-plus that the state owes to school districts.

Options for school districts that have run out of options. (Source: Leg. Analyst) Click to enlarge.

“So the decision that you have to make as a school district is whether or not you can afford to fund that deferral for the term and if you can’t then it becomes a cut for you in a way,” Montero explained to subcommittee members.

Five of the nine districts that received a negative certification fall into the small and/or rural category. The tiniest, La Grange Elementary School District in Stanislaus County, will be shutting down at the end of this school year and sending its six students to other districts.

Two of the districts, Vallejo City Unified and South Monterey Joint Union High School, have already been bailed out by the state and are under a state-appointed administrator. Linda Grundhoffer, the Chief Business Official in South Monterey – formerly King City Joint Union High School District – said ever since the district went under state control in 2009 the onslaught of budget cuts “are just making it harder for this district to recover.” The district is seeking to lower the interest rate on its state loan from 5.44 percent to 1 percent through legislation, but so far Senate bill 1240and Assembly bill 1858 are on the suspense files in the appropriations committees of their respective houses.

In an unusual twist, this year’s negative list also contains a small but very wealthy district. At a little over $170,000, the median household income in the San Mateo County foothills community of Portola Valley is nearly three times the state average. But the district is now trying to stave off a state takeover after an audit found a shortfall of about $850,000 for this school year plus an additional half-million dollars allegedly misappropriated by the former superintendent, who’s already facing felony charges stemming from his tenure as chief financial officer in the neighboring Woodside Elementary District.

The list of districts on the negative and qualified lists may continue to set somber new records depending on what happens in November. “Second interim certifications are assuming a better budget environment than realistically may be there after November,” FCMAT’s Montero told TOPed. “Without that assumption, it is likely the numbers of qualified and negative districts would have been higher.”

One hundred years ago last month, the cry “women and children first” echoed on the decks of the ill-fated Titanic. A century later, the ship carrying California’s future is listing in the water. However, it seems that today no one is willing to make a sacrifice: It’s every man, woman, and child for himself or herself.

California was once the envy of the country — beautiful beaches, good jobs, a booming economy, and the promise of the best public education system, including top-notch, affordable state colleges and universities. However, the economic seas became rough in 2007 with the impact of the recession. In an effort to keep California afloat, our leaders in Sacramento — unable or unwilling to right the ship by raising revenue — scrambled for items to dump overboard. The value of education plummeted as other budget items were given priority, and education funding became the primary target for cuts, suffering a disproportionate loss of revenue. From 2007-08 to 2010-11, K-12 education funding sustained 54 percent of the loss of revenue, although it represented approximately 40 percent of the General Fund. In contrast, corrections sustained just a 4 percent loss, despite representing approximately 10 percent of the General Fund.

As the recession persists, the captain and crew – Gov. Brown and the legislators – decide what will be loaded into the lifeboats to survive, but there’s little evidence that the children are first. (Lucky for prisoners, federal law makes sure they are at the front of the line.) Instead, lawmakers and the governor are accusing each other of failing to save the children and the integrity of our state’s educational system Gov. Brown has proposed one solution to right the ship, but it requires the children to stay on board until the voters send help by passing his tax initiative. He seems to have overlooked the fact that children may go overboard before help can arrive — their schools must open months before the actual amount of education funding is determined.

The impact of the recession and the sinking of California are wreaking havoc on the schools, as has been documented this month by reports from both the Legislative Analyst’s Office and EdSource. School districts have been left scrambling, throwing items overboard or rearranging deck chairs in a futile attempt to balance their loads. Many districts are forced to borrow funds to keep schools open when the state sends IOUs, adding to their debt burden. Since 2008, more than 40,000 teachers, counselors, nurses, librarians, bus drivers, etc. have been lost, with an additional 20,000 teachers plus thousands more school employees currently in peril. While some education bargaining units are negotiating to save themselves and their students, others seem willing to let those in third class (lower seniority) and their schoolchildren sink with the ship to save their own skins.

Our schools need adequate funding to open their doors before the tax initiative-funded lifeboat can arrive. And the truth is that even if it passes, the initiative provides little more than current funding levels. Because of the uncertainty of the initiative’s passage, districts are compelled to budget with worst-case funding scenarios. As California continues to pitch in the seas of the recession, it is truly the children who will suffer the most severe, long-term damage. They’ll suffer larger classes, shorter school years, the loss of “less important” programs such as music and the arts, the disbanding of professional learning collaborations with the shuffling of remaining teachers, and so on, leaving 6.3 million schoolchildren with permanent gaps in their learning.

One hundred years ago, when the Titanic sank, the world was stunned and outraged that so many lives were lost, and new, preventative measures were instituted to save lives. Years later, we are watching another ship, the public school system in California, go under. Where are the safety measures today for the schoolchildren of our state? California was already 50th in the nation for student-to-teacher ratio in 2008, and that was before education funding suffered $20 billion in losses. How much more water will we allow our schools to take on before we step in to do something? Will we be able to tell the children of California that we did everything to save them, or will we sit by idly, shrug our shoulders, and point our finger at someone else and say that it was his/her fault? Unlike the Titanic, we can stop this disaster. We must call out “children first” to save them and the future of our state.

Tamara Hurley is a California native, a product of the state’s public education system, and a 24-year resident of San Diego. Trained as a scientist, she has spent the past eight years volunteering on behalf of her children’s public schools, from the classroom to PTO and PTA boards as well as on district, community, and school site committees and site governance teams. Tamara is a board member of Educate Our State, a statewide, nonprofit, parent-led, grassroots organization fighting for high-quality public K-12 education in California.

California voters give Gov. Jerry Brown low marks overall for the way he has handled K-12 education. But, at the same time, they support some school reforms that he’s championing, including directing much of new revenue to poor students, according to a Public Policy Institute of California poll.

The poll, of 2,005 Californians earlier this month, revealed that a slim majority of 54 percent of likely voters

continues to support Brown’s proposed tax initiative in November, although nearly two-thirds of likely voters – and 89 percent of Democrats – back raising income taxes on the rich, the key element of the plan. What they don’t like, with only 46 percent for, 52 percent opposed, is the other piece of the proposal: raising the sales tax for schools (Brown is proposing one-quarter percent for four years).

More Democrats than Republicans, Latinos than whites, women than men back Brown's plan for higher taxes. Source: PPIC April poll. (Click to enlarge)

In January, 68 percent of likely voters and 72 percent of all adults told PPIC they would back taxing the rich and raising the sales tax to raise money for K-12 schools. That was before the initiative had a title and summary, which was read to poll respondents in the latest poll, so there’s no simple comparison. Nonetheless, the 14 percentage point drop, to 54 percent, is worth speculation. It could be that the complicated wording of the summary turned off some respondents, or perhaps it’s reservations after being told that only a piece of the money will go toward K-12 schools. The proposals also “guarantees funding for public safety services realigned from state to local governments” and “addresses the state’s budgetary problem by paying for other spending commitments.” Whatever the reason, Brown will face a hard sell getting the initiative passed in November.

There may be a competing initiative on the ballot that would fund schools exclusively, more in tune with what voters say they want. But the PPIC poll is hardly good news for civil rights attorney Molly Munger’s Our Children, Our Future initiative. It would raise an estimated $10 billion by raising the income tax for nearly all earners, and that wasn’t popular. Only 40 percent of likely voters in the PPIC poll favored a general income tax increase, with 57 percent opposed. Most Democrats back it (56 percent) but only 42 percent of independents and 21 percent of Republicans.

Voters could be holding the Legislature responsible for the cuts to schools: 90 percent of Californians and 92 percent of likely voters agree that the state budget situation is creating a big problem or somewhat of a problem for K-12 schools. Nearly all Californians (87 percent) believe the “quality of education” in the state is at least somewhat of a problem, with 58 percent saying it’s a big problem. That same percentage of public school parents, a subset in the survey, said they are very concerned about teacher layoffs at their child’s school. And 78 percent of all likely voters disapprove of the automatic cuts to schools that Brown is suggesting if the tax initiative fails.

Positives on elements of reform

Brown has proposed a weighted student funding plan, a major overhaul of how schools are funded and governed. The poll doesn’t ask about that per se, but the survey did ask about the key elements of the plan. For the most part, Californians approve of them, in concept.

Flexibility and local control: More than four out of five Californians (82 percent) want local control of school spending decisions, either within school districts (48 percent) or at the school level (34 percent). Likely voters are even stronger on the issue: 53 percent want decisions at the district level and 36 percent at the school site. The one region where this is less so is Los Angeles, where only 40 percent want decisions made by the district; 21 percent (twice the state average) would prefer power to remain in Sacramento. That sign of lack of faith locally should be a warning to the Los Angeles Unified School Board, which is proposing a $298 parcel tax in November.

Targeted funding for poor students: Brown would funnel significant portions of new dollars to low-income students and English learners. Californians strongly support helping the former, less so for English learners, reflecting ambivalence toward illegal immigration.

Most Californians (82 percent) believe that school districts in lower-income areas of the state have fewer resources than school districts in wealthier areas, according to the poll. More than two-thirds (68 percent) of Californians say districts with high proportions of poor children should get a bigger share of new funding. But only about half (52 percent) say more money should go to English learners. (Since about three-quarters of English learners are also poor, we’re talking about roughly the same children.) For likely voters, the level of support drops to 54 percent for the poor and only 40 percent for English learners. Democrats provide the largest support across the board.

Other interesting findings in the poll:

Only about a third (36 percent) of Californians think that the state’s per pupil spending for K–12 public education is less than other states’ spending; 27 percent believe it’s above average. (In straight dollars, it’s 37th and 47th when regional costs of living are factored in.)

If a school construction bond were on the local ballot, 62 percent of residents 53 percent of likely voters say they would vote yes ; it takes 55 percent for passage.

If a parcel tax to supplement funding of local schools were on the ballot, 60 percent of Californians and 51 percent of likely voters would support it – about the same level of support as in past years. It takes a 66 percent majority to pass one. Parcel taxes are regressive since the tax is the same, regardless of the value of the property. Support is about even across regions, although most parcel taxes have been approved by voters in Bay Area school districts. Latinos (72 percent) and Asians (65 percent), younger Californians, those without a high school diploma, renters and those with household incomes less than $40,000 indicate the most support for a parcel tax.

Gov. Jerry Brown hasn’t taken the Education Coalition’s “no” as a final answer on a weighted student funding plan.

In the last two weeks, Brown administration officials have been telling districts and civil rights groups that he remains determined to reform how schools are financed. However, Brown also is open to changing the formula to respond to some of the objections to his initial proposal, Sue Burr, executive director of the State Board of Education and the governor’s key education adviser, said this week.

“The governor made a proposal in January, and, as with all governors, he intends to see it through,” Burr said.

Brown is proposing to simplify the state’s complex, inequitable and outmoded funding system while directing about an extra third more dollars per student to English learners and low-income children. Brown’s version of weighted student funding is largely modeled on a plan proposed four years ago by Stanford emeritus professor Michael Kirst, who’s now president of the State Board of Education, and others. Gov. Schwarzenegger’s Committee on Education Excellence endorsed the idea, as have civil rights advocates. Even the Education Coalition, representing school districts, the state PTA, and employee unions, in its March 6 letter opposing Brown’s plan, praised its “laudable goals.”

However, coming off of consecutive years of budget cuts, the Ed Coalition letter called this “the worst possible time to consider changes to the school funding formula.” As proposed, the formula would simply redistribute dollars while leaving substantial budget cuts in place, the Coalition said. Though not in the letter, several education leaders questioned Brown’s judgment in creating potentially divisive policy changes, with winners and losers among districts, at the same time that he was campaigning for a significant tax increase in November.

Burr acknowledged there was “a major miscommunication” when the weighted student formula was introduced in January that fed the assumption that the administration did not plan to pay back money owed to schools. This debt, called the deficit factor, primarily consists of unpaid cost-of-living adjustments, and now totals about $9 billion, or 20 percent of Prop 98 funding. With the Department of Finance projecting an additional $16 billion in new Proposition 98 funding over the next six years, assuming the proposed tax increase passes, the deficit factor could be repaid, while the weighted student formula is phased in, Burr said.

Brown has proposed phasing in the weighted student formula over six years. Every district would receive a base funding level plus 37 percent extra per child for every unduplicated English learner and poor child. Districts with concentrations of disadvantaged children would get an additional percentage increase­ – as much as $3,500 or more per child.

Paying off money owed to schools

The current plan proposes raising the base and the extra weights equally as Proposition 98 revenue increases over time, about 40 percent at the end of six years. But another way is to build up just the base as the deficit factor is repaid, Burr said. That would address criticisms of suburban districts with few disadvantaged students, which would see their per-student funding barely increase under the initial proposal. This would mark a significant change while initially reducing extra money for needy children.

Nothing is final, Burr said, because the governor hasn’t made up his mind on various options.

Other changes that the administration is considering:

Differentiating funding levels by grade level. That’s how funding is now, with high schools getting more money per student. Setting a uniform rate hurt high school districts under the current weighted student formula. The administration has all but committed to this change.

Maintaining funding for a few categorical programs as special cases, therefore not including them in the pot for redistribution under the weighted student formula. One is bus transportation, whose funding Brown had proposed protecting for only one year. The argument is that some small rural districts could potentially lose thousands of dollars per child if transportation money is not protected. Another is called the Targeted Instruction Improvement Grants, or TIIG. This is basically desegregation money, totaling nearly $900 million, that for years has primarily gone to a few urban districts: Los Angeles, Long Beach, San Francisco, Oakland, and San Jose. The policy argument is that these districts entered into court-approved plans for spending the money. The political argument is that Brown needs the support of these districts.

Taking a few years longer to phase in the reforms.

Stretching out paying down $10 billion in deferrals, late payments to schools that are part of the state’s “wall of debt.” Brown has an accelerated schedule for eliminating deferrals. Instead, he could scale this back.

Brown will make changes to the weighted student formula part of his revised state budget in mid-May. As Burr notes, every year the Legislature can examine the funding formula and tweak it to make it right. “Every year, the Legislature can make a judgment,” she said. “The formula is not set in stone.”

The Education Coalition still may not change its position, but Brown only needs a 50 percent majority of the Legislature. The big winners under the formula – districts like Fresno, Santa Ana, Los Angeles, and San Bernardino – have yet to make their voices heard. And a formula that is more palatable to some of the “losers” would make it easier to pass.

Now that California school buses will be running for at least another year, why not let districts use them to make a little cash on the side – the side of the buses, that is.State Senate Republican Leader Bob Huff has introduced a bill to do just that. SB 1295 would allow school districts to sell advertising space on the outside of school buses and keep the revenues.

“California’s fiscal mismanagement has resulted in budgetary woes for our state’s public education system,” said Senator Huff in a news release. “My legislation provides a new and needed source of funding for our schools at no cost to taxpayers.”

There’s no solid estimate yet of how much money the ads could generate. Eric Thronson, who prepared the analysis of SB 1295 for the Senate Transportation and Housing Committee, said one advertising company he checked with charges advertisers anywhere from $40 to more than $200 a month, and the company takes its cut from that.

Colorado was the trendsetter, approving bus ad regulations almost 20 years ago, and districts there have met with mixed success. Colorado Springs, the first district in the country to advertise on the outside of buses, takes in about $40,000 a year, but that’s out of a total budget around $225 million. Another Colorado district with 103 buses earned only about $3,000 a year and recently made some changes in the hopes of increasing its earnings to $10,000 a year.

The anti-tax group, CalTax, anticipates much higher revenues in California. In a report released earlier this month, the organization estimates that advertising on the outside of buses could raise $31 million in annual revenue for school districts.

Whether it’s on the high end or low, Sen. Huff cites the recent fiscal status report released by the State Department of Education showing that 127 school districts are in danger of not being able to pay their bills within the next two years as evidence that school districts need more freedom to raise money. “The senator’s feeling is that any amount of extra revenue is welcome, and it gives school districts freedom to use it how they want,” said Huff’s spokesman William Bird.

School bus as moving moving billboard for schools. (Source: Campaign for a Commercial-free Childhood). Click to enlarge.

Rural Southern Humboldt Unified School District is ready to start moving on the ads. Last week, the school board passed a resolution in support of Huff’s bill and posted a sample letter on its website for parents and other residents to send to their local state senator. Last January, when the mid-year trigger cuts eliminated school bus service, the district sent two busloads of students and parents to Sacramento and successfully lobbied lawmakers to restore the funds.

“It’s an indication of how desperate rural districts are to maintain their transportation,” said school board member Barbara Lindsay. Humboldt is both tiny and huge. It has 780 students in kindergarten through 12th grade attending seven schools scattered around 773 square miles. As it is, some children spent two hours each way on the school bus.

“The rural school children are the ones who really need to go to school,” explained Lindsay. “A lot of our kids live so rurally that they really need a place a to go to socialize with kids their age.”

Too little for too much

California is already one of 26 states that expressly permits, or doesn’t disallow, advertising inside school buses. Districts can also sell space on the exterior of campus buildings, lunch tables, in hallways, and in yearbooks or other school-related publications, said Huff’s spokesman, Bird.

SB 1295 has also been amended since it was first introduced to set some parameters for size and content of the ads. Districts cannot display ads for the following:

Tobacco, alcohol, guns, or anything sexually explicit

Discriminatory content or nature

Implies an endorsement by the school district

Is political in nature or relates to a political activity, campaign or candidate

Is false, misleading, deceptive, or promotes an illegal activity or antisocial behavior

Additional rules set restrictions on where the ads can be placed and how big they can be so they don’t block the bus drivers’ line of sight, distract other drivers so much that they don’t see the flashing red lights on the bus, or pose any danger of falling off. But none of the arguments is swaying critics.

Campaign for a Commercial-free Childhood opposes the ads on moral grounds. “It’s terrible that schools today are struggling financially. But commercializing children’s education is not the answer,” says the group on its website. “Advertising on school buses will exploit a captive audience of students, turn schools into endorsers of products that may be harmful to children, and could make the buses less safe.”

So far, however, there is no research to show that buses with ads on them are more likely to be involved in accidents. But given the potential physical danger and manipulative impact on children, they’re simply not worth the income, argues the watchdog group Public Citizen.

Huff’s bill passed the Senate Transportation and Housing Committee and is scheduled for a hearing before the Senate Education Committee on Wednesday. A separate bill, AB 1448, by Assemblymember Warren Furutani would “prohibit the Legislature from reducing funding for home-to-school transportation below the amount established in the Budget Act of 2011.” That measure cleared the Assembly Education Committee last week with bipartisan support, and now heads to appropriations.

Barbara Lindsay, the school board member in Southern Humboldt Unified School District, is rooting for and working toward getting both bills through. Lindsay runs her family’s cattle ranch, and doesn’t want to have to leave the area because there’s no money for buses. “It’s still a really good place to raise kids,” she said, “if you can get them to school.”

California school districts should not be bound by seniority when budget cuts force them to lay off teachers, according to far-reaching report released yesterday by the state Legislative Analyst’s Office.

A Review of the Teacher Layoff Process in California also recommends changing the deadline for notifying teachers they may be laid off from March 15 to June 1, eliminating the teachers’ right to a formal hearing and giving more authority to local districts and bargaining units to determine the layoff process.

The LAO based its recommendations on responses to a survey from 230 out of about 950 school districts, although the Analyst’s Office said those responses included eight of the state’s ten largest districts.

One the main concerns was the huge number of “overnotifications,” or sending pink slips to far more teachers than necessary. According to the LAO, for every ten teachers given preliminary layoff notices last March, about 75 percent of them ended up keeping their jobs.

The problem lies in the timeline, which forces school districts to make budgetary decisions before the governor releases the May Revise, which contains the most current information on projected state revenues. To be on the safe side, districts issue layoff notices based on the worst-case scenario.

The report notes that lowering the number of initial layoff notices “would reduce the time and cost invested in conducting the layoff process, result in fewer teachers unnecessarily concerned about losing their job, and minimize the loss of morale in the school communities affected by layoff notices.”

Union leaders criticized that logic as overly simplistic. Shannon Brown, California’s 2011 Teacher of the Year and president of the San Juan Teachers Association, said moving the deadline for layoff notices may make sense from a fiscal perspective, but would have devastating consequences for laid-off teachers, giving them just a few weeks to find a new job. That’s what contributes to low teacher morale, said Brown. That and the entire crisis in education funding in California that’s led to increasing class sizes, dwindling resources, teacher bashing, and the loss of some 32,000 teaching positions in the last four years. “The layoff notices only add insult to injury,” she said.

The high price of layoffs

It costs districts about $700 for each teacher who’s pink-slipped in the spring. Sacramento City Unified School District, which sent notices to more than 460 teachers last week, estimates the cost at $670 per teacher. That’s $308,000 for a district that’s been cut by $90 million over the past three years. Statewide, California school districts spent about $14 million last year in

Each pink-slipped teacher costs the district about $700. (Source: CA Legislative Analyst) Click to enlarge.

administrative and legal expenses, plus the costs of postage and paying for substitutes for teachers who challenged their notices before an administrative law judge.

Typically teachers will ask for a hearing if they believe the district made a mistake in their hiring date or the type of credential they hold; both factors that count when determining who gets laid off. But the LAO concluded that the hearings do not “add substantial value” to the process, and recommended that they be eliminated and replaced with a less formal review process.

San Juan’s Brown countered that the hearings in her district uncover mistakes nearly every year that result in people getting their jobs back. “If hearings were not held,” said Brown, “there would be people wrongfully terminated.”

Asked about the report at the Capitol yesterday morning, State Senate President pro Tem Darrell Steinberg said although he hadn’t had a chance to review it detail, he sympathized with the financial dilemma facing school districts and noted that unless the Governor’s ballot initiative to raise taxes passes in November, the fiscal crisis will become even more severe. At that point, some of the LAO’s recommendations will have to be on the table. “We need to consider an array of options moving forward,” said Steinberg.

That worries the California Teachers Association. Spokesman Mike Myslinski said the LAO’s plan is a misguided effort that fails to address the underlying problem of the state’s inability to balance the budget. “The bottom line,” said Myslinski, “is that the state really is in extraordinary times now, and we want lawmakers to be cautious of using these current dire circumstances to make permanent policy decisions that impact student learning.”

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Welcome to the NEW TOP-Ed!

After a brief hiatus, SVEF’s education blog, Thoughts on Public Education (TOP-Ed), is back in a new format. The blog will focus on deep analysis of education issues, especially as they relate to Science, Technology, Engineering, and Mathematics (STEM). These entries will attempt to translate complex education topics for readers as well as invite bloggers representing different perspectives to respond to our entries. We will also invite guest contributors to share their ideas about education along the way. We invite you to stay tuned to the new TOP-Ed.

We thank journalists John Fensterwald and Kathryn Baron for their work on TOP-Ed over the past three years. Their tireless efforts have successfully established TOP-Ed as a forum to present and discuss key education issues of the day. We wish them the best of luck continuing their excellent brand of journalism at EdSource and encourage you to keep up with them at edsource.org.